Monday, January 31, 2011

Camden, NJ braces for deep police, fire cuts - (www.finance.yahoo.com) Yet another crisis is upon this burdened city, among the most impoverished and crime-ridden in the country. Deep layoffs of city workers go into effect on Tuesday -- cutting up to 383 jobs, or one-fourth of the city's employees. The exact number depends on whether public workers' unions make last-minute concessions. In any case, the cuts are likely to be deep -- and could be a blow to the quality of life in a city where more than half the 80,000 residents, mostly black and Hispanic, live in poverty. Worst case, the layoffs could slash half the police force and one-third of the fire department for this city just across the Delaware River from Philadelphia. Practically every other job in the city is likely to be affected. "The fear quotient has been raised," said the Rev. Heyward Wiggins, pastor of Camden Bible Tabernacle in a rough neighborhood on the city's north side, who constantly hears from his congregants about the layoffs. His Fellowship Choir of adults from their 20s to their 50s, used to practice on Thursday or Friday evenings. Now, Wiggins said, he's moving rehearsals to Sunday after worship services because members are afraid of being out after dark when the police force is cut.

`Citi Weekend' Shows Too-Big-to-Fail Endures - (www.bloomberg.com) Last week’s report by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, suggests that the views of both sides are likely at odds with future financial realities. The report, titled “Extraordinary Financial Assistance Provided to Citigroup Inc.,” focuses on the “Citi weekend” in November 2008 when the bank received additional financial assistance from the government -- just weeks after the U.S. had injected capital into all the big banks in the first wave of TARP bailouts. The report reveals fresh details about who made the key decisions and on what basis. The most interesting quotes are from Tim Geithner, who was both president of the Federal Reserve Bank of New York and President Barack Obama’s pick as Treasury Secretary (his nomination, announced that Monday, was leaked to the market the previous Friday.) Geithner is refreshingly frank that too big to fail hasn’t necessarily been ended. ‘Just Don’t Know’: “In the future we may have to do exceptional things again if we face a shock that large,” he said, according to the report. “You just don’t know what’s systemic and what’s not until you know the nature of the shock.”

EMU policies are pushing Southern Europe into systemic political crisis - (www.telegraph.co.uk) Let us assume for the sake of argument that Europe succeeds in containing the immediate EMU debt crisis, with help from Asia, and that Germany’s fractious coalition actually agrees to a bail-out fund big enough to make any difference. What does this achieve, other than allowing banks to buy time by offloading liabilities onto European and Chinese taxpayers? The 30pc gap in labour competitiveness that has built up between Germany and Club Med since the eurozone currencies were locked together in perpetuity will remain. Greece, Portugal, Spain, and Ireland will stay trapped in structural depression through this year, and well into next, rotating from a liquidity crisis to a chronic political and social crisis that exposes the inability of elected governments to counter 1930s job wastage. Unemployment is 28pc in Andalucia, and 30pc in Cadiz.

In total, there were nearly 2.9 million foreclosure notices filed during the year, according to report released Thursday by RealtyTrac. That was a record high, but just 1.7% above 2009. It most certainly would have been higher had notices not plunged in November and December as banks halted tens of thousands of foreclosures in the face of the robo-signing scandal. "Total properties receiving foreclosure filings would have easily exceeded 3 million in 2010 had it not been for the fourth quarter drop in foreclosure activity," said James Saccacio, RealtyTrac's CEO.

For Greece, Buyback Of Bonds Is Floated - (www.nytimes.com) “It’s the first time we’ve got an indication Europe is starting to think outside of the box,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland. “Ultimately, it’s the return to some kind of stable debt path that will provide the biggest turnaround in confidence,” he said. Talk of a restructuring has been taboo among European leaders, who fear that a default by a euro country could permanently undermine the credibility of the common currency. The latest speculation about a Greek restructuring was prompted by a report in the national weekly Die Zeit on Wednesday, as well as statements by two ministers of the Greek government who said Tuesday that extending debt repayments would be a good idea. The Greek government denied it was in talks with private creditors to restructure its debt, Bloomberg News reported. Greek bonds already trade on open markets at a steep discount to their face value.

Sunday, January 30, 2011

U.S. Mayors Say City Bond Defaults Likely Amid Strain - (www.bloomberg.com) The mayors of Los Angeles and Chicago said the financial strains still weighing on local governments in the wake of the recession may cause cities to default on their bonds. Los Angeles Mayor Antonio Villaraigosa, a Democrat, said municipalities are being squeezed as states move to balance their own budgets, a step that can involve taking more funds that would otherwise be sent to towns and cities. “There’s no question you’ll see some cities in default,” Villaraigosa told reporters today at a press conference in Washington, where the U.S. Conference of Mayors is meeting. “The difference between us and the federal government is they can print money. The states balance their budget oftentimes on the backs of cities, counties and school districts. We actually have to balance a budget.” Speculation about local governments defaulting has weighed on the $2.9 trillion municipal market, where returns tumbled during the last quarter of 2010 by the most since 1994. Last week, yields, which move inversely to prices, hit the highest since the depths of the financial crisis in December 2008, according to the Bond Buyer 20 Index, a gauge of 20-year bonds backed by general tax revenue.

Vallejo Files Plan to End Court Control of Finances - (www.bloomberg.com) The city of Vallejo, California, proposed paying some creditors as little as 5 percent of what they are owed, making it the first general municipality that would fail to fully repay its debts in bankruptcy. General unsecured creditors would collect 5 percent to 20 percent of their claims under the plan of adjustment filed late yesterday in U.S. Bankruptcy Court in Sacramento, the state capital. No city or county has used federal bankruptcy laws to force creditors to take less than they are owed, according to Bruce Bennett, the lead lawyer for Orange County, California, when it filed the biggest municipal bankruptcy in the U.S. in 1994. Vallejo’s plan assumes the city can’t provide essential services, like police and fire protection, while also paying its debts, he said. Should the city succeed, the case “may become an important precedent,” Bennett said in an interview. The creditors, who include retirees and former employees, would be paid $6 million over two years. The plan must first be voted on by creditors before U.S. Bankruptcy Judge Michael S. McManus decides whether to approve the proposal.

Greek Bond Spread Widens; Zeit Says Germany Considers Debt Plan - (www.bloomberg.com) Greek bonds fell, pushing the extra yield investors demand to hold the securities over German bunds higher, after Die Zeit reported Germany is considering a plan that would help Greece restructure its debt. Greece would be allowed to buy back government bonds with funds from the European Financial Stability Facility made available “with favorable interest conditions,” the German newspaper said in an e-mailed release today, without saying where it obtained the information. The yield on 10-year Greek bonds jumped 32 basis points to 11.60 percent as of 10:47 a.m. in London. The spread over bunds widened 28 basis points to 8.61 percentage points.

Wells Fargo Won’t ‘Pay Up’ to Settle Mortgage Buybacks - (www.bloomberg.com) Wells Fargo & Co. won’t seek a settlement with Fannie Mae orFreddie Mac on disputed mortgages, and terms offered to rival banks may not have been as generous as some portrayed, Chief Financial Officer Howard Atkins said. “The quality of our securitizations was of a much higher caliber than all of the other large bank peers,” Atkins said today in an interview. “It doesn’t make sense for us to pay up to get rid of the remaining small amount of problems we have.” Prodded by lawmakers, Fannie Mae and Freddie Mac have pressed banks including Wells Fargo to buy back mortgages that were based on faulty data about the homes and borrowers. Wells Fargo said today in its fourth-quarter report that demands from the government-owned mortgage companies declined for a second straight quarter and now stand at $1.5 billion.

The Key Housing Story That's Going To Get Even Worse In 2011 – (www.businessinsider.com) This is a key story: there were a record low number of housing completions in 2010, breaking the record set in 2009. The total for single family, multi-family and manufactured homes (estimated) was 703 thousand units in 2010. That is about 17% below the 844 units completed in 2009 (including manufactured homes). The previous record low was 1.244 million in 1982. As Tom Lawler noted, there will be record low number of multi-family units completed in 2011 - since it takes over a year on average to complete - and probably a record low number of total units. Note: Multi-family completions will be at a record low this year, but starts will increase. This graph shows annual completions for 1 to 4 units, 5+ units and manufactured homes. In 2010, 1 to 4 unit completions were at a record low 506 thousand. This was just below the 534 thousand units completed in 2009. This is far below the previous record low of 712 thousand units in 1982. For 5+ units, completions were at 147 thousand units. This was just above the record low of 127 thousand in 1993 - and that record will be broken in 2011. This doesn't include demolitions that were probably in the 200 to 300 thousand unit range. This suggest the excess supply was reduced in 2010, and will probably be significantly reduced in 2011. Of course this also depends on household formation - and that means jobs.

Saturday, January 29, 2011

Fannie Mae is jacking up mortgage fees - (www.latimes.com) Potential home buyers who have high credit scores and hefty down payments may be surprised that even they are being targeted for higher 'risk-based' fees. Here's mortgage giant Fannie Mae's sobering New Year's greeting for home buyers and refinancers in 2011: Give me more money! If you want a loan this year, you're going to have to pay more — thousands of dollars more in some cases — even if you've got stellar credit scores and bundles of cash handy for a down payment. Things could get much worse if your scores have been sagging with the economy and you don't have much money upfront. In a Dec. 23 memo to lenders in its network, Fannie announced that it had decided to impose a new schedule of higher add-on fees, similar to what Freddie Mac — the other huge congressionally chartered mortgage investor — rolled out to jeers from the real estate industry just before Thanksgiving. Both corporations have required massive federal financial infusions — estimated at close to $150 billion — since the housing market began deteriorating, and they now operate under a federal conservatorship arrangement. The Obama administration plans to submit long-promised proposals to Congress this month on what to do with the two — phase them out, restructure them, privatize one or both of them, or other solutions.

Bank may go after your other assets if you're in foreclosure - (www.sun-sentinel.com) Worried that your bank might go after your other assets if you're late on the mortgage or lose your home to foreclosure? It can happen in Florida, especially if a bank sells your foreclosed house and doesn't recoup the full loan amount and if you're a big-dollar borrower. With nearly half of all mortgages under water in South Florida, plenty of residents may wonder if their home lender can garnish their wages or suddenly lock down their deposit accounts. Rules on tapping assets vary by state and depend on the terms of specific loans and accounts. Problems on typical home loans usually don't crop up before foreclosure. They tend to come after the bank sells the home and ends up short. In Florida, banks can go to court for a "deficiency judgment" to collect the rest of the money owed on a mortgage after foreclosure, said Anthony di Marco, vice president of the Florida Bankers Association. Banks can pursue other assets with that judgment. They can file a lien on your boat or car. But "they can't jump priority on a loan," so the lender for that boat or car has first dibs to collect, di Marco said.

How Foreclosure Crisis Hits Jewish Community - (www.jewishtimes.com) Norman Silverstein describes himself as your average, run-of-the-mill, middle-class working stiff. Makes a decent living wage, works hard, has a few kids and a nice house in the Northwest Baltimore suburbs. His slice of the American dream. But a couple of years ago, Mr. Silverstein’s wife lost her job, a victim of the downsizing, cutback climate. Initially, the Silversteins didn’t become alarmed. Just a blip on the screen, they figured. “We had a loss of income, but figured things would turn around for us quickly,” he said. “But then my wife couldn’t find another job. Things didn’t change as quickly as I had thought or hoped.” Desperation started to set in. The Silversteins began missing their monthly mortgage payments. It was a matter of necessity, Mr. Silverstein insisted, and not something he’s particularly proud of. “We needed money for food and health insurance and stuff,” he said. “You’ve gotta keep the lights on, you know, so something had to give.” Soon, the Silversteins received a terse letter from an attorney for their lending bank about the start of foreclosure proceedings on their house. Mr. Silverstein needed to catch his breath at times when recalling the experience of receiving that letter and others like it in the subsequent months.

The little red book that swept France - (www.independent.co.uk) Take a book of just 13 pages, written by a relatively obscure 93-year-old man, which contains no sex, no jokes, no fine writing and no startlingly original message. A publishing disaster? No, a publishing phenomenon. Indignez vous! (Cry out!), a slim pamphlet by a wartime French resistance hero, Stéphane Hessel, is smashing all publishing records inFrance. The book urges the French, and everyone else, to recapture the wartime spirit of resistance to the Nazis by rejecting the "insolent, selfish" power of money and markets and by defending the social "values of modern democracy". The book, which costs €3, has sold 600,000 copies in three months and another 200,000 have just been printed. Its original print run was 8,000. In the run-up to Christmas, Mr Hessel's call for a "peaceful insurrection" not only topped the French bestsellers list, it sold eight times more copies than the second most popular book, a Goncourt prize-winning novel by Michel Houellebecq. The extraordinary success of the book can be interpreted in several ways. Its low price and slender size – 29 pages including blurbs and notes but just 13 pages of text – has made it a popular stocking-filler among left-wing members of the French chattering classes. Bookshops report many instances of people buying a dozen copies for family and friends.

The Conservative Constitution of the United States - (www.washingtonpost.com) House members opened the 112th Congress on Thursday by reading aloud the Constitution, presumably as a first step toward fulfilling the tea party's goal of "restoring" our nation's founding document. However, an alternative text, obtained by this author, David Cole, via WikiLeaks, has reportedly begun circulating in secret among incoming GOP lawmakers, representing the Constitution they hope to read aloud when the 113th Congress begins. Here, revealed in public for the first time, is the Conservative Constitution of the United States of Real America: We, the Real Americans, in order to form a more God-Fearing Union, establish Justice as we see it, Defeat Health-Care Reform, and Preserve and Protect our Property, our Guns and our Right Not to Pay Taxes, do ordain and establish this Conservative Constitution for the United States of Real America.

Friday, January 28, 2011

Only Supreme Court Intervention Can Keep This California Ski Town From Bankruptcy - (www.businessinsider.com)One California city has already defaulted on a bond payment this year. A few hours away, a second city is in the final throes of a fight against bankruptcy. Mammoth Lakes has appealed to the California Supreme Court to overturn a ruling that the ski town owes $30 million to a local developer, according to The Bond Buyer. The Superior Court ruling was upheld by an appelate court on Dec. 30. So how did the 7,500-person town run up this kind of bill? Mammoth Lakes gave a contract to a local developer in 1997 to improve the local airport and develop a adjacent $400-million hotel. This was during the Dot Com boom, when nothing in California could lose. In 2007, the town delayed the hotel project, citing changes in FAA policy. (LA Times has more details.) Mammoth Lakes bonds carry a BB rating from Standard & Poor’s, with a developing outlook.

Brown Burdens Mayors by Unloading California Deficit - (www.bloomberg.com) San Jose Mayor Chuck Reed can look out his City Hall window and see three Adobe Systems Inc. downtown towers, housing 2,000 workers, created in part with incentives CaliforniaGovernor Jerry Brown wants to eliminate. The software maker built the towers with the help of $35 million in city redevelopment money, Reed said last week in a telephone interview. He and nine other California mayors plan to meet with Brown, himself mayor of Oakland from 1999 until 2007, to persuade him not to shut the authorities that provide low- cost funds for development. The idea is part of the governor’s budget proposal. Tax-advantaged development financing provides one of the “few tools we have to keep jobs in California,” Reed said. Brown’s “vast and historic” plan to realign state and local revenue has mayors seething and county executives wary about being saddled with the costs of fixing California’s broken budget. Some local leaders say the governor’s proposal will shift $5.9 billion in costs to counties while slashing $5.8 billion of social-services spending, increasing the burden on municipalities, to help close a $17.2 billion 2012 deficit.

Citi's Feud With Meredith Whitney Continues, As Bank Tells Clients To Ignore Her Media Hype - (www.businessinsider.com) Meredith Whitney made her name by (correctly) trashing Citigroup. You can read her original report here. Well, now she's at her own shop, and attempting to make a second "career call" with her predictions of muni bond doom. We've covered it pretty extensively, and a key thing is that while many people agree with her about stresses in this market (and even more defaults), very few see the outright doom scenario that Whitney does. Add Citigroup (and analyst George Friedlander) to the list of her opposers. In a note that was put out Friday, the firm specifically calls out media-borne hype, and claims that the selloff is the result of a feedback loop.

Charlie Gasparino Rips Meredith Whitney, And Accuses Her Of Costing Taxpayer Millions - (www.businessinsider.com) Meredith Whitney continues to take it from all sides! The latest attacker is Charlie Gasparino, who accuses her of causing a muni market panic, thus costing taxpayers millions. In a HuffPo column, he demands that Whitney release her gigantic report detailing why, exactly, she expects the market to crash this year. Of course, its her proprietary research, and it's her right to keep it for her paying clients, but it is interesting since last week on CNBC she said one of the reasons for doing this research was to illuminate the issue of municipal debt. It's also interesting because during that same interview, Whitney hinted that her main point was to encourage investors to know which states would have weak economies (and not necessarily to short these bonds).

States warned of $2,500bn pensions shortfall - (www.ft.com) US public pensions face a shortfall of $2,500bn that will force state and local governments to sell assets and make deep cuts to services, according to the former chairman of New Jersey’s pension fund. The severe US economic recession has cast a spotlight on years of fiscal mismanagement, including chronic underfunding of retirement promises. “States face cost pressure, most prominently from retirement benefits and Medicaid [the health programme for the poor],” Orin Kramer told the Financial Times. “One consequence is that asset sales and privatisation will pick up. The very unfortunate consequence is that various safety nets for the most vulnerable citizens will be cut back.” Mr Kramer, an influential figure in the Democratic party and still a member of the investment council that oversees the New Jersey pension fund, has been an outspoken critic of public pension accounting, which allows for the averaging of investment gains and losses over a number of years through a process called “smoothing”. Using data from the states, the Pew Center on the States, a research group, has estimated a funding gap for pension, healthcare and other non-pension benefits, such as life assurance, of at least $1,000bn as of the end of fiscal 2008.

Blue Shield Seeks Significant Hike In California Health Insurance Rates - (www.npr.org) Blue Shield of California informed hundreds of thousands of policy holders that their insurance costs could go up as much 59 percent this year. The Los Angeles Times reports: San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from new healthcare laws. "We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members," the nonprofit insurer told customers last month. In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October. Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

Government mortgage subsidies keep prices unnaturally high - (www.nytimes.com) AS we all move forward with our New Year’s resolutions, it’s a good time to remember the promises our politicians have been making about the American mortgage market. The Obama administration, at a conference last August on the future of housing finance, pledged to have, come January, a plan for Fannie Mae and Freddie Mac, the mortgage giants that are now wards of the government. Congressional Republicans, in their recent position paper, made an even bolder resolution: to build a mortgage market that “does not rely on government guarantees” and “does not make private investors and creditors wealthy while saddling taxpayers with losses.” This latter promise is pleasing populist rhetoric. The problem is, it may be neither politically nor practically feasible. Even if we forget about the gigantic near-term problem — namely, that the federal government is in the housing market mainly because most banks simply won’t issue mortgages that can’t be guaranteed by Fannie, Freddie or the Federal Housing Administration — there’s the fact that federal involvement in housing has been a constant since the 1930s.

Foreclosures May Be Undone by State Ruling on Mortgage Transfer - Bloomberg - (www.bloomberg.com) Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real- estate law governing how mortgages may be transferred. The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues. A victory for the homeowners may invalidate some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools. Such a ruling may also be cited in other state courts handling litigation related to the foreclosure crisis. “This is the first time the securitization paradigm is squarely before a high court,” said Marie McDonnell, a mortgage-fraud analyst in Orleans, Massachusetts, who wrote a friend-of-the-court brief in favor of borrowers. The state court, under its practices, is likely to rule by next month.

Bust in housing creates new kind of declining city - (www.latimes.com) In the Inland Empire and other former home-building hot spots, the housing bust has created a new kind of declining city, different from the nation's traditional rusting centers of industry, that could languish for years. Although the causes of the decline in these metropolitan areas are distinct from the loss of employment from shrinking manufacturing and industry in some of the nation's old industrial powerhouses, these areas could experience fates similar to places such as Cleveland and Detroit, with neighborhoods experiencing high rates of vacancies for a very long time, according to a study to be released Thursday. "Some neighborhoods are going to suffer tremendously or are never going to come back or come back very, very slowly," said James R. Follain, senior fellow at the Rockefeller Institute of Government and author of the study published by the Research Institute for Housing America, a division of the Mortgage Bankers Assn.

Wednesday, January 26, 2011

New Jersey Agency Debt Costs Soar as Yields Rise: Muni Credit - (www.bloomberg.com) The New Jersey Economic Development Authority scaled back the week’s largest bond offering as tax- exempt municipal yields climbed and Governor Chris Christie made comments about the state’s financial well-being. A New Jersey general-obligation note due in August 2015 traded at an average yield of 2.51 percent yesterday afternoon, or 90 basis points over top-rated four-year debt, according to a BVAL index. The same security traded at 2.1 percent a week ago, 57 basis points above the benchmark. Municipal bonds suffered their worst quarterly performance in 16 years in the three months ended Dec. 31. Investors pulled a net $22.7 billion from muni mutual funds in the past nine weeks, according to data from the Investment Company Institute in Washington. Vanguard Group Inc., the world’s largest mutual- fund company, withdrew a request filed last year with regulators to open three municipal-bond index fundsamid concern that state finances may deteriorate.

Solar Panel Maker Moves Work to China - (www.nytimes.com) Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States. But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China. The factory closing in Devens, Mass., which Evergreen announced earlier this week, has set off political recriminations and finger-pointing in Massachusetts. And it comes just as President Hu Jintao of China is scheduled for a state visit next week to Washington, where the agenda is likely to include tensions between the United States and China over trade and energy policy.

Arbitration, Litigation, Aggravation - (www.nytimes.com) WHEN investors file complaints against their brokers, the matters are almost always heard by an arbitration panel rather than by a judge or jury. Arbitration forums like those run by the Financial Industry Regulatory Authority typically adjudicate cases more quickly than the courts and less expensively, because costs associated with discovery and extensive legal filings are minimized if not eliminated. But a swift and inexpensive outcome is not always assured in Finra arbitrations, as an investor case under way in California shows. By cleverly circumventing Finra’s rules, the financial firm that was sued by its former client has brought a related case in California state court, adding significantly to the investor’s costs of seeking relief. And to make matters even more exasperating, Finra’s rules preclude it from investigating the firm and its tactic until after the damage is done. The story begins in 2005, when Helen Cohen, an elderly widow, opened an investment account with the brokerage unit of what is now called the State Employees Credit Union, in Raleigh, N.C. Ms. Cohen, who died three years later, at the age of 86, was in poor health at the time she was dealing with S.E.C.U. Notes taken by an S.E.C.U. employee after meeting with Mrs. Cohen at her San Diego home stated that she “confuses easily.”

So much for Chicago talk of poaching Oregon business - (www.oregonlive.com) In the wake of the Measure 66 and 67 tax increases approved by Oregon voters a year ago,Chicago Mayor Richard Daley quickly said he'd be recruiting Oregon businesses to move to his own supposedly more business-friendly city. Wonder what Daley is saying now that Illinois legislators have approved a stunning 66 percent increase in the state's income tax? Here's some of the fine print, if you want to more deeply compare the two states: Under the new bill, the Illinois personal income-tax rate - 5 percent - will still be much lower than Oregon's. But Illinois has high sales taxes. In 2008, just as the recession was first hitting, the total state and local tax burden in Illinois $4,346 per capita compared to $3,719 in Oregon, according to the Tax Foundation. Because Oregon had a lower per capita income, however, Illinois residents paid 9.3 percent of their income in state and local taxes and Oregonians paid 9.4 percent.

Will democracy, Illinois style, ever change? - (www.illinoisissues.uis.edu) Illinois' reputation for corruption is well-documented. Nine men have served as governor in the past 50 years. Two — Democrat Otto Kerner and Republican George Ryan — were convicted of crimes they committed while in office. (Ryan is appealing his conviction.) Democrat Dan Walker also was imprisoned after he left office, but for crimes unconnected to his tenure as governor. And Republican William Stratton was indicted for tax evasion in connection to his use of campaign funds, but he was ultimately acquitted. As Democratic Gov. Rod Blagojevich begins his second term, federal investigations of his administration's hiring and contract practices continue. His fundraiser and political adviser Antoin "Tony" Rezko has been indicted for an influence-peddling scheme. Though Blagojevich has not been charged with any wrongdoing himself, based on the persistent federal prosecutor's previous record, it's fair to say that could change. It is possible, in other words, that the majority of Illinois governors who served during the past half century could end up being indicted on corruption charges. That so many Illinoisans at state government's apex have been accused of crime raises the question of whether there is a culture of corruption.